CANADA FX DEBT-C$ closes little changed, lower oil prices weigh

Reuters Staff

3 Min Read

* Canadian dollar at C$1.1233 or 89.02 U.S. cents
* Bond prices mixed across the maturity curve
(Adds analyst comment, updates prices to close)
By Alastair Sharp
TORONTO, Oct 24 (Reuters) - The Canadian dollar gave up
early gains against the U.S. greenback to close flat on Friday,
with traders exhibiting a dogged determination to sell the
currency on any gains. It gained 0.4 percent for the week.
The loonie, as Canada's currency is colloquially known, was
expected to weaken further due to lower oil prices and worries
about the results of European bank stress tests that are due at
the weekend.
"The Canadian dollar tried and failed to rally for the
fourth day in a row," said Adam Button, a currency analyst at
ForexLive in Montreal.
Prices for Canadian oil and gas fell even as the Brent
global benchmark paused a months-long rout.
"The overarching story in the past two months has been U.S.
dollar strength, but I think the Canadian part of that is a
commodity and resource story. Canadian oil is beginning to
collapse," Button said.
The Canadian dollar ended the session at C$1.1233
to the U.S. dollar, or 89.02 U.S. cents, unchanged from its
Thursday North American session close.
Button said he sees no end to the loonie's weakness, and
expects it to end the year at around C$1.15, or 87 U.S. cents.
The Canadian currency had strengthened on Wednesday after a
Bank of Canada statement dropped a reference to neutrality on
interest rates. But investors were unable to get more clarity
from the central bank because a scheduled news conference was
canceled after a gunman shot dead a soldier at the National War
Memorial in Ottawa and gunfire erupted inside parliament.
Bank of Canada Governor Stephen Poloz is now set to testify
at the Senate banking committee on Oct. 29. His testimony had
been scheduled for Thursday but was canceled due to the
shootings.
Jack Spitz, managing director of foreign exchange at
National Bank Financial, also said the loonie's likely
trajectory was towards further weakness.
"Crude is turned down, as is natural gas, 1 to 1.5 percent
and that price action is likely to weigh on a currency like
Canada, so we expect (the Canadian dollar to weaken) a bit off
the C$1.12s back into the middle of the range, C$1.1220 to
C$1.1240," he said.
Global stock markets looked headed for their strongest week
of the year on Friday following reassuring company results,
encouraging data from the world's biggest economies and signs
the European Central Bank is upping its efforts to stimulate the
European economy.
Canadian government bond prices were mixed, with the
two-year up half a Canadian cent to yield 1.003
percent and the benchmark 10-year slipped 7 Canadian
cents to yield 2.009 percent.
(Additional reporting by Andrea Hopkins; Editing by Peter
Galloway and James Dalgleish)